The first article in this series explained the concept of the circular economy: a model based on natural ecosystems where both biological and technical “nutrients” are cycled repeatedly rather than being lost to final disposal. In this second article we examine what the circular economy looks like in practice, through case studies of organisations that have already “tightened the circles”.

Manufacturing

At a time when rising raw material and energy prices, along with resource scarcity, are a serious concern, the circular economy concept has been enthusiastically embraced by policy-makers and business leaders alike.

Established success stories

While the terminology of the circular economy may be new, its basic concepts and ideals have long been understood by a range of forward-thinking companies. The following case studies are taken from the Ellen MacArthur Foundation reportTowards the Circular Economy and Defra’s March 2013 consultative document on the UK waste prevention plan.

Caterpillar

Caterpillar (CAT), the world’s largest maker of off-road vehicles, construction and mining equipment, has been successfully remanufacturing its vehicles since 1972. A financial deposit system creates an incentive for customers to return worn-out products via the dealer network. In 2010, CAT remanufactured 70,000 tonnes of parts, up from 45,000 the previous year.

Renault

Renault operates a dedicated remanufacturing plant near Paris producing 17 different types of assemblies, from engines to pumps. It is able to obtain used parts from a variety of sources including distributors and end-of-life vehicle disassemblers, and the business is currently worth €200m.

Ricoh

Ricoh leases photocopiers to its clients as part of its Total Green Office Solution. At the end of the lease period the copiers are fully refurbished, with replacement of key components and installation of new software. They then re-enter service as part of the Green Line Range, whose popularity keeps pace with that of the brand new products. Ricoh’s own model of the circular economy is called the Comet Circle and is based on ensuring that all components can be disassembled and reused. By focusing on longer product life and reuse, they are “moving onto a tighter circle”. Ricoh intends to reduce the input of new resources by 25% by 2020 and by 87.5% by 2050 from the level of 2007, and to reduce the use of materials that are at high risk of depletion (eg crude oil, copper, chromium) by 2050.

Michelin

Michelin has been leasing, rather than selling, its tyres to European fleets since the 1920s. Customers are offered a tyre management service that involves maintenance, upgrading, retreading and collecting for recovery at end of life.

Examples from the consumer goods sector

Circular principles can be applied by the retail sector just as much as they have been by manufacturers. The Ellen MacArthur Foundation’s second report identifies end-of-life clothing and textiles as having considerable potential for reuse and recycling. Marks & Spencer‘s popular Shwopping scheme has raised public awareness of the benefits of clothes recycling; it benefits people in developing countries who value the clothes, and the donors themselves in terms of opportunities to win prizes and vouchers. Clothes that are too worn to be reused can be recycled for other uses such as rags, yarn or stuffing for mattresses.

What M&S has achieved with pink bins in the store, fashion retailer Asos is doing online by enabling consumers to resell end-of-life clothing. Small firms can use the online platform to market vintage garments and accessories as well as new ones.

Circulating biological nutrients

The circular economy either recycles organic wastes or returns them as nutrients to the soil. Wastewater treatment systems today often use bacteria that eat sludge and turn it into carbon. Waste management company Veolia achieved a breakthrough in converting this “wastewater carbon” into biomass rich in the polymer PHA, which has mechanical properties equivalent to polypropylene and is thus valuable in making consumer plastics and chemicals. Veolia produced the first biopolymers from municipal waste in 2011 and is now scaling up the process for customers in Europe.

A futuristic vision of green urban living has been realised at The Plant, Chicago — a vertical aquaponic farm growing vegetables and farming tilapia. Organic wastes are recovered using an anaerobic digester and a combined heat and power plant. The installation also houses craft food businesses, and discarded materials from one business are used as a resource for another in an explicitly circular system.

Electronics recycling in Japan

Europe’s WEEE (Waste Electrical and Electronic Equipment) Directive has increased the recycling of electronic goods, but the UK figure of 30–40% recycling is far outweighed by Japan’s impressive 74–89%. Furthermore, much of Japan’s recycling is a closed loop system where the recycled materials are used to make goods similar to the original products, much in keeping with circular economy ideals. Japan’s success is explained by the structure of its collection and recovery networks. Manufacturers are obliged to collaborate in shared ownership of disassembly plants, which gives them an incentive to design for recycling. Some even take prototype products to the recycling plant to ensure that they can be easily dismantled at end of life. In the EU obligations rest only on the manufacturers and suppliers; in Japan consumers share the cost of recycling and can hold suppliers to account. Collection arrangements are better too, with post offices and retail stores offering a drop-off point for WEEE.

Potential for improvement

The Ellen MacArthur Foundation report that first popularised the concept of the circular economy identifies goods that are relatively complex and have a medium lifespan as ideal candidates for a circular approach. In circular parlance, these are known as “sweet spots”. Three types of product in this category are singled out for attention: mobile phones, washing machines and light commercial vehicles.

Mobile phones

Mobile phones and smartphones are of particular interest because they contain valuable strategic metals — a priority for recycling. Only 15% of phones are currently collected as part of the WEEE regime and very few are refurbished and reused; but there is scope for growth. While consumers may pay a premium for the latest model, businesses that provide smartphones for employees are more likely to favour functionality over fashion, and thus value the advantages of cheaper remanufactured phones. Design modifications, such as the use of a more robust case and the phasing out of adhesives, would make it easier to refurbish phones. Finally, steps could be taken to boost the collection of second-hand phones; for example, the use of data wiping software to reassure the first owners that their confidentiality is secure. Manufacturers and suppliers could set up joint collection schemes and encourage take-up with incentives such as deposits or buy-back schemes.

Washing machines

As with many durable, high-quality goods, the more expensive washing machines save money in the long term, but most consumers favour the cheaper, less durable models. Washing machines lend themselves to leasing schemes, or arrangements whereby a service rather than a product is purchased by the consumer. This type of scheme was pioneered by Electrolux, which offered consumers in Northern Europe the choice of paying per wash, using its high-quality machines. Sadly this scheme failed because it relied on a smart metering service that was withdrawn by the energy utility. Consumer uptake was also limited. Leasing arrangements have proved more successful: Bosch Siemens leases out washing machines, and out on the next “circle” the manufacturer ISE refurbishes washing machines and sells them to the domestic market.

Light commercial vehicles

Thanks to the EU End-of-Life Vehicles Directive, a high percentage of vehicles are recycled (around 71%), but there is scope for far greater resource savings through refurbishment, which would give these vehicles another “life” on the road. Typically, only a small number of parts wear out in these vehicles, including the engine and suspension, bumpers, wheels, battery and fluids. If these are replaced, the vehicle can continue to be driven at its full performance. In a circular economy, vehicles would be designed to allow easy, fast and inexpensive substitution of these components. Design changes could include modularisation of the engine by changing the design to bracket mounting, widening the engine bay for easier access to connection points, and using quick fasteners instead of screw couplings or bolted connections. Manufacturers would invest in refurbishment plants with skilled staff and standardised processes.

The next steps

How can circular principles and practices be rolled out to the economy as a whole, rather than remain the province of a few forward-thinking businesses? There are barriers to overcome, particular for smaller companies locked into the linear model, but solutions have been identified and the goal of a circular economy is rapidly becoming more realistic as governments take it on board and invest additional resources in “tightening the circles”.

Still to come

In the final article in this series we will look at the next steps for government and business in moving towards a circular economy.

Last reviewed 29 May 2013